144 Misc. 2d 519 | Nassau County District Court | 1989
OPINION OF THE COURT
FINDINGS OF FACT
On August 9, 1988, the plaintiff here Thomas Vellaringattu and his wife (not a party here) entered into a written contract for the purchase of real estate located at 1935 Commonwealth Avenue, Merrick, New York. Prior to entering into the contract there was an engineering report, part of which indicated problems with the roof. The defendant here George R. Caso
Paragraph 5 of the contract rider provided: "5. Premises shall be delivered vacant and broom clean on title, except that if Seller remains in possession of the premises following the closing of title herein, he shall deposit the sum of $1,250.00 with his Attorney, in escrow, to guarantee his removal therefrom within five (5) days after title closes, and shall obligate himself to pay to the Purchaser the sum of $100.00 for each and every day he remains in possession of the premises beyond such guaranteed date of removal. All adjustments, including interest on purchaser’s mortgage, shall be made as of delivery of possession. This clause shall survive the delivery of the deed herein, and shall in no event be construed as creating a relationship of landlord and tenant.”
Paragraph 9 of the contract rider provided as follows: "9. The contract downpayment shall be held in escrow by george r. caso, esq., as Sellers agent until closing of title or prior termination of this contract pursuant to the terms hereof.” Paragraph 11 of the rider of the contract provides as follows: "If litigation is commenced by any party regarding any money held in escrow by Seller’s agent, the parties agree that the Seller’s agent shall not be made a party to any lawsuit regarding release of said escrow. Any litigation shall be solely between the parties, and Seller’s agent agrees not to disburse any escrow which is subject to dispute until provided for in a Court order, judgment or stipulation between the parties.”
On November 10, 1988, a closing took place. No discussion took place at the closing involving the roof. The plaintiff made an inspection of the premises prior to closing. At the closing no discussions took place with respect to the holding of an escrow, no escrow or survival agreement was entered into and the clauses of the contract were not initialed or noted in any way as if to survive closing. It was apparent, however, that the parties and attorney were aware that actual possession would change hands on November 13, 1988. Adjustments were made to that date.
On November 13, 1988, the plaintiff and his wife moved into
The plaintiff here sues the defendant based on a theory of breach of the escrow agreement and his obligations as escrow agent. The defendant contends that no escrow agreement was entered into at closing that would have made the escrow chargeable with the guarantees on the roof provided for in the contract and that, therefore, the escrow, even if held, was only to ensure departure by the sellers on November 13, 1988, which did take place. In addition, he contends the requisites for an escrow agreement were not present.
CONCLUSIONS OF LAW
In an action based upon an alleged breach of an escrow agreement, the one who claims that a particular person was acting as an escrow agent for him in a transaction must prove the existence of an escrow agreement by a fair preponderance of the credible evidence. (Tinker Natl. Bank v Grassi, 57 Misc 2d 886 [1968].)
An "escrow” is defined as a written instrument which by its term imparts a legal obligation and which is deposited by the grantor, promisor, or obligor, or agent thereof, with a stranger or third party, to be kept by the depositor, until the performance of a condition or the happening of a certain event, and then to be delivered over to the grantee, promisee or obligee. (Jackson ex dem. Gratz v Catlin, 2 Johns 248 [1807], affd 8 Johns 520; Silberstein v Murdoch, 216 App Div 665 [1926].)
There are four elements that constitute the creation of an escrow agreement: (1) an agreement as to the subject matter and delivery of the deposit or instrument; (2) a third-party depository; (3) delivery of the funds or instrument to the third-party conditioned upon the performance of some act or the happening of some event and (4) relinquishment by the grantor or depositor. (Press v Marvalan Indus., 422 F Supp 346 [SD NY 1976].)
Generally, all prior negotiations or agreements are merged in the deed and such negotiations or agreement are not
The contract of sale in this case is a contract between the sellers and the buyers (one of which sellers is plaintiff here). The defendant here, attorney for the seller, is not a party to that contract, even though he is referred to therein. The result in this regard would be different if the defendant were a signatory to the original contract and a request was made at closing to hold back part of the down payment. The reference, in any case, to the defendant in the contract is only, pursuant to paragraph 9 of the rider, for purposes of holding the down payment in escrow until closing "or prior termination of this contract.” (Emphasis added.)
Paragraph 9 of the contract shows an intention by the parties not to extend the down payment escrow beyond closing unless otherwise indicated. This is significant because the plaintiff is relying on a theory that the escrow to be held at closing was part of the down payment originally held which the plaintiff claims needed no further agreement or identification than the original contract of sale. This is not true in law, as can be seen above from the elements of an escrow agreement, nor is it even true according to the tenor of the underlying contract of sale. What the plaintiff is doing is confusing the fact that because the defendant held the down-payment payment in escrow, no further agreement would be necessary to form an escrow agreement at closing as to the guarantees in the contract contained in paragraph 4. In effect, by not entering into a "possession”, "escrow” or "survival” agreement at closing no delivery was made of the subject of the escrow nor was there even an acceptance of such an arrangement by the parties, most importantly, the escrow agent here. Even an initial of paragraphs 4 and 5, by all sides and each attorney would have indicated such arrangement, acceptance and delivery. Absent same, there was no escrow agreement.
Even if we were to assume that paragraph 5 of the rider,
Therefore, it is the opinion, decision and order of this court that the plaintiff’s claim here be denied and dismissed as against this defendant. It would be less than fair of me, however, not to point out and find that the guarantee clause (para 4) of the contract did not merge in the deed, but survived the closing, thereby giving the plaintiff recourse against the seller.